STATE OF MISSOURI

PRELIMINARY REVIEW AND OBSERVATIONS OF 2012 SINGLE AUDIT AND OTHER

DOCUMENTS FOR MISSOURI LEGISLATIVE HEARING OF DEPARTMENT OF SOCIAL
SERVICES
By Dan Amsden & Fran Adams
April 11, 2013

Thank you for allowing me to address you again this week. At the hearing last week
we provided statements from the 2012 Single Audit Report, compared those to
statements from the 2011 Single Audit Report and identified that significant issues
were consistent from FY2011 to FY2012. I had understood Mr. Kinkade to have
earlier in the hearing indicated that when a problem was identified at DSS it was
addressed and corrected immediately. He then acknowledged what I said about
repetition of issues between the two Single Audit Reports and indicated that it was
so because there had been insufficient time following release of the 2011 Single
Audit Report to make the corrections before the 2012 Audit. Subsequent to that
hearing I have examined the 2010 Single Audit Report and found the same issues
listed there as in the 2011 to 2012 Reports. Some specifics include:

In the Citizens Summary of the 2010 Single Audit Report it states that for
Eligibility Reassessments Of the 66 cases reviewed, the Department of
Health and Senior Services did not perform mandatory annual reassessment
of eligibility for 74 percent of the Medicaid recipients receiving State Plan
Personal Care or the Aged and Disabled Waiver program services. As a result,
DHSS could not demonstrate payments were only made on behalf of eligible
recipients.
The 2010 Citizens Summary also states The Department of Social ServicesChildrens Division lacked adequate controls to ensure that payments from
the Child Care Development Fund were proper and benefitting only eligible
clients. Of the 60 cases reviewed, 22 percent lacked eligibility
documentation, including 6 case files that were missing entirely, and of the
60 payments reviewed, 50 percent lacked adequate documentation and/or
were not in compliance with DSS policies. Previous state audits noted similar
concerns of the DSS Child Care program, and a recent internal review by DSS
of the Child Care program revealed a 43 percent error rate. DSS needs to
increase oversight to address the high error rate and poor case management
record.
Page 49 of the 2010 Report also states We tested 66 cases randomly
selected from the Medicaid cases receiving PC or ADW services.We noted
the DHSS did not perform annual reassessments of eligibility for 49 of 66 (74
percent) cases reviewed. The most recent reassessment for the majority of

these cases was completed 2 to 4 years ago; however, the most recent
reassessment for 2 cases was last completed over 10 years ago.
This issue is further reinforced in the 2012 Single Audit Report on Page 48
that says As noted in the two prior audits, the DSDS does not ensure annual
reassessments are performed, as required, to determine continued need of
services of Home and Community Based Services (HCBS) recipients. As a
result, the DSDS has not ensured most HCBS recipients have a need for and
are receiving the appropriate level of care.

Based on seeing the same issues pointed out in three consecutive years, there is
reason to perceive that a systemic problem exists with verification of eligibility for
participation in these programs and the possibility that significant amounts of
money are being improperly spent. This problem seems endemic to
government programs based on the GAO report in February that $44
billion in Medicare expenditures went to the wrong people or that they
were paid the wrong amount in the last year. I would recommend that
specific documentation be provided to this committee explaining in detail what
corrective actions or changes in procedures, policies and/or personnel have been
taken or will be taken in the remaining three months of FY2013 to assure that these
same issues not appear in the 2013 Single Audit Report. This should include the
plan to hold employees accountable for failure to perform, as we are currently
aware of no accountability for performance deficiencies.

I would next like to address a question that Representative Lichteneggar asked

during the hearing last week which was whether any of these programs ever end.
The last three Single Audit Reports indicate that the number of programs has
increased each year from 341 in FY2010 to 349 in FY2011 and 355 in FY2012. Our
Spending Oversight Council has reviewed, in addition to the Single Audit Reports, a
large number of DSS Performance Measurement Charts. Those performance
measures all address spending and numbers of recipients. We have not found
objective performance measures that address true results such as life
improvements, behavioral changes or other benefits as compared to a known
baseline. The federally funded programs do not appear to have established
baselines or objective goal requirements and thus no measure of the worth of a
program. We believe that this leads to spending money for the sake of spending
money, and because it is available, and that even though it is allowable to do so,
good management would not follow that practice. A response to the Auditors 2012
report contending that $32.4 million was improperly used for federal TANF funds
and $24.2 million was improperly spent on college scholarship for TANF recipients
was disagreement of the auditors conclusion and a statement that the
expenditures are allowable under federal guidelines. This response appears to
indicate spending because it was allowable rather than necessarily expressing a
concern over the reasonableness of the spending of taxpayer funds. Based on what

we see there is no attempt to close out programs or adjust program spending

activities based on the merit of what the programs accomplish, no basis for ending
a program without true measure of results or lack thereof, but that the focus is only
on accessing and spending taxpayer money. I would also add a
recommendation that, based on GAO reports released this week that tens
of billions of dollars are spent on duplicate programs each year,
particularly with similar programs being funded by different federal
agencies , a study be conducted to determine if duplications in these
programs exist and how to eliminate the duplications.

At this time I would like to ask my Spending Oversight Council colleague, Fran
Adams, to address some additional items that we would like to note.

We have reviewed a report from the state of Illinois to the American Legislative
Exchange Council in which Illinois was facing a budget shortfall of $2.7 billion in
their Medicaid program in 2011. In that report the state spells out 59 specific areas
of their Medicaid program where they were able to save money and they spell out
the amount of savings for each of the 59 areas with a total savings of $2.788 billion.
We would like to ask if Missouri has looked at those same 59 items to see if savings
can be achieved of a significant magnitude in Missouri as it was in Illinois.
The MO HealthNet Division (MHD) also has many eligibility concerns with Medicaid
and Childrens Health Insurance Program. Page 83 of the 2012 Report states
Effective controls are not in place to ensure or demonstrate compliance with participant

eligibility requirements of the Medical Assistance Program and the Children's Health Insurance
Program (CHIP). In addition, ineligible payments were made related to these programs, but have
not been reported to, or resolved with, the grantor agency.
The Report further states that Over the last several years, participants have been moved in
batches from the legacy eligibility determination system to the Family Assistance Management
Information System (FAMIS). The FAMIS has features to automatically initiate
annual redeterminations.As of October 31, 2012, there were 894 Medicaid and CHIP cases
(which include one or more participants) that had not been fully converted in the FAMIS. The
last eligibility redeterminations for these cases ranged from 1996 to 2012 and were performed
before the cases were moved to the FAMIS. Of these, 747 cases did not receive a
redetermination during the year ended June 30, 2012, as required. If these
participants are not fully converted in the FAMIS, future redeterminations will not
be automatically initiated by the systemParticipants in 584 of the 747 cases had payments
made on their behalf after the date a redetermination was due. These ineligible payments totaled
$5,207,584 for the year ended June 30, 2012. In addition, since many of these cases have still
not been redetermined as of December 2012, there are likely ineligible payments
made on behalf of these participants during fiscal year 2013 as well.

Page 84 states that The MHD has identified Medicaid and CHIP payments made on behalf of
approximately 400 children from 2009 to 2012 who were later determined to be ineligible for
these programs at the time of service; however, the MHD has not taken steps to resolve these
questioned costs with the grantor agency.
Other similar issues are noted in the Single Audit Report and the Auditees responses include
statements of agreement, partial agreement, and in a few cases disagreement. In each case the
Auditee response states one or both of the following:
A. We agree with the auditor's finding. Our Corrective Action Plan includes our planned
actions to address the finding.
B. We partially agree with the auditor's finding. Our Corrective Action Plan includes an
explanation and specific reasons for our disagreement and any planned actions to
address the finding.
Since issues appear to be repeated through the three years of Single Audit Reports that the
Spending Oversight Council has examined we recommend that this Committee requests copies
of the specific Corrective Action Plans that respond to the 2012 Single Audit Report and a
statement of planned accountability of and within the DSS if the Corrective Action Plans have
not been implemented and reappear in the 2013 Single Audit Report.